ATO Interpretative Decision
ATO ID 2004/385
Fringe Benefits Tax
Car fringe benefits: cost basis (operating cost) method - log book records not maintainedFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can an employer use the operating cost method to value the car fringe benefits in relation to a particular car, under subsection 10(2) of Fringe Benefits Tax Assessment Act 1986 (FBTAA), where a log book has not been maintained?
Decision
Yes. An employer can use the operating cost method of valuing all of the car fringe benefits for a particular car, under subsection 10(2) of the FBTAA, where a log book has not been maintained. However, there will be no reduction in the operating cost of the car for any business journeys that were made.
Facts
The employer provides a car to an employee which is used for predominantly private purposes.
The employer has never maintained a log book in respect of this car.
The employer elects to use the operating cost method to calculate the taxable value of the car fringe benefits in relation to this car.
The employee made a recipient's payment in relation to this car.
Reasons for Decision
Under subsection 10(1) of the FBTAA an employer may elect to use the cost basis (or operating cost) method to calculate the taxable value of all of the car fringe benefits that relate to a particular car.
The operating cost method under subsection 10(2) of the FBTAA makes provision for a reduction in the taxable value of the car fringe benefits in relation to a car where there has been business use of the car. However, under section 10A of the FBTAA, the employer is not entitled to make such a reduction unless a log book has been maintained.
Where a log book has not been maintained the taxable value of a car under the operating cost method will be the total operating costs of the car reduced by any recipient's payment. The employer is entitled to use the operating cost method of calculating the taxable value of the car fringe benefits but will be prohibited from making any reduction in the taxable value for any business use of the car.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 11 March 2026 | Business Line | Updated to correct business line |
Year of income: Year ended 31 March 2005
Legislative References:
Fringe Benefits Tax Assessment Act 1986
subsection 10(1)
subsection 10(2)
subsection 10(5)
section 10A
Keywords
Fringe benefits tax
Car fringe benefits
FBT log book records
FBT operating cost
FBT car
Date reviewed: 2 March 2026
ISSN: 1445-2782
| Date: | Version: | |
| 31 March 2004 | Original statement | |
| You are here | 11 March 2026 | Updated statement |